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DECREE

Amending and supplementing a number of articles of the Government'sDecree no. 89/1999/ND-CP of september 1, 1999, on deposit insurance

THE GOVERNMENT

Pursuant to the December 25, 2001 Law on Organization of the Government;

Pursuant to December 12, 1997 Credit Institutions Law No. 02/1997/QH10, and June 15, 2004 Law No. 20/2004/QH11 Amending and Supplementing a Number of Articles of the Credit Institutions Law;

At the proposal of the Governor of the Vietnam State Bank,

DECREES:

Article 1.- To amend and supplement a number of articles of the Government's Decree No. 89/1999/ND-CP of September 1, 1999, on deposit insurance, as follows:

1. Article 2 is amended and supplemented as follows:

"1. Credit institutions and organizations other than credit institutions, which are allowed to conduct a number of banking operations according to the provisions of the Credit Institutions Law and take deposits from organizations and individuals, must participate in compulsory deposit insurance.

2. Insured organizations must publicly post up their participation in deposit insurance at their headquarters and transaction places."

2. Article 3 is amended and supplemented as follows:

"Deposits to be insured are those in Vietnam dong deposited at insured organizations by individuals, households, cooperative teams, private enterprises and partnerships, except for the following cases:

a/ Deposits of shareholders owning more than 10% of the charter capital or holding more than 10% of the voting share capital of such insured organizations;

b/ Deposits of members of Managing Boards or Control Boards, general directors (directors) or deputy general directors (deputy directors) of such insured organizations;

c/ Deposits used as security for the performance of depositors' obligations;

d/ Deposits used for the purchase of valuable papers, excluding those of several kinds under the guidance of the Vietnam State Bank."

3. Article 4 is amended and supplemented as follows:

"1. The maximum insurance sum payable to all deposits, including both principal and interest, of a depositor (an individual or his/her representative at law) at an insured organization as defined in Article 3 of this Decree, shall be 50 (fifty) million dong.

2. The adjustment of the maximum insurance sum provided for in Clause 1 of this Article shall be decided by the Prime Minister at the proposal of deposit insurers and on the basis of opinions of the Vietnam State Bank and the Finance Ministry."

4. Article 6 is amended and supplemented as follows:

"1. Deposit insurance premium is an amount of money payable by an insured organization to a deposit insurer for the insurance of clients' deposits. Deposit insurance premiums shall be accounted as operation costs of insured organizations.

2. Insured organizations must pay an annual deposit insurance premium equal to 0.15% of the average deposit balance of deposits insured at such insured organizations according to the provisions of Article 3 of this Decree.

3. The level of deposit insurance premium provided for in Clause 2 of this Article may be adjusted for each form of deposit insured organization or on the basis of the evaluation or classification by a competent state body by decision of the Prime Minister at the proposal of the concerned deposit insurer and on the basis of opinions of the Vietnam State Bank and the Finance Ministry."

5. Article 14 is amended and supplemented as follows:

"1. Deposit insurers may provide financial supports in the form of loan provision, guarantee or debt re-purchase or otherwise to insured organizations in accordance with the provisions of law.

2. Financial supports mentioned in Clause 1 of this Article shall be considered and decided by Managing Boards of deposit insurers."

6. Article 15 is amended and supplemented as follows:

"1. Deposit insurers shall consider and decide on providing financial supports to insured organizations according to the provisions of Article 14 only after the Vietnam State Bank has determined that the dissolution or bankruptcy of the insured organizations may seriously affect the safety of the financial and banking system as well as the political and socio-economic stability.

2. The provision of financial support mentioned in Clause 1 of this Article shall be regarded an asset-related special measure applied by deposit insurers to restore business activities of insured organizations. This financial support amount shall be repaid before all other debts owed by insured organizations."

7. Article 16 is amended and supplemented as follows:

"1. For insured organizations which are determined by competent state bodies as being incapable of paying due debts, within 60 days after competent state bodies request in writing such organizations to terminate transactions for the liquidation of their assets or after the courts notify their decisions to open the procedures for asset liquidation according to the provisions of law on bankruptcy, deposit insurers shall pay insurance money to depositors at such insured organizations on the principles defined in Article 4 of this Decree, and, at the same time, carry out the procedures for issuing decisions to terminate deposit insurance.

2. Deposit amounts (including both principal and interest) which exceed the maximum amount payable by deposit insurers shall be paid to depositors in the course of liquidating assets of insured organizations in accordance with the provisions of law on dissolution and bankruptcy."

8. Article 17 is amended and supplemented as follows:

"Deposit insurers may pay insurance sum directly to depositors or authorize credit institutions to do so on the basis of entrustment contracts under the provisions of law."

9. Article 18 is amended and supplemented as follows:

"1. The payment of insurance sum to depositors or their representatives or heirs under the provisions of law must be based on lists of depositors which are made by insured organizations and approved by deposit insurers on the basis of valid documents.

2. Ten years after deposit insurers make first notices on the payment of insurance sum, the insurance sum which has no recipients shall be added to the operating capital of deposit insurers and owners of insured deposits concerned shall no longer have the right to request deposit insurers to pay such insurance sum.

3. Deposit insurers shall issue regulations on dossiers, procedures and order for paying insurance sum."

10. Article 19 is amended and supplemented as follows:

"Where the working capital of deposit insurers is temporarily inadequate to provide support to insured organizations meeting with solvency difficulties or to pay insurance money to depositors at insured organizations which are forced to dissolve due to their insolvency or become bankrupt according to the provisions of Article 16 of this Decree, deposit insurers may mobilize capital in the following forms:

a/ Receiving loans or special support capital from the Government;

b/ Issuing bonds according to the provisions of law on the issuance of bonds;

c/ Getting loans from credit institutions or other organizations under the Government's guarantee."

11. Article 20 is amended and supplemented as follows:

"Deposit insurers shall become creditors of insured organizations with respect to the insurance sum already paid. If insured organizations are forced to dissolve due to their insolvency or become bankrupt, deposit insurers may divide the value of their assets in the order of payment like for depositors under the provisions of law on dissolution and bankruptcy. Deposit insurers shall be entitled to participate in the management and liquidation of assets of insured organizations according to the provisions of law."

12. To add the phrase "are forced to dissolve due to insolvency or" before the phrase "become bankrupt" in the titles of Section 5 and Article 21.

Article 2.- Implementation provisions

1. This Decree takes effect 15 days after its publication in "CONG BAO."

2. The State Bank of Vietnam shall guide the implementation of this Decree.

3. Ministers, heads of ministerial-level agencies, heads of Government-attached agencies, presidents of provincial/municipal People's Committees, chairmen of Managing Boards of deposit insurers, and insured organizations shall have to implement this Decree.